Philanthropy Journal – United Way at crossroads

By Todd Cohen

The United Way is getting back to basics.

As its annual fund drives begin in communities throughout the U.S., the United Way is asking donors to let it decide how to distribute their contributions by putting to work its knowledge of local needs and charities.

The theme for a growing number of local United Ways is their “community impact.”

That’s a good business strategy that shows a willingness to adapt to market forces.

An equally pressing issue is the community role the organization should play – a question United Way leaders should be examining in every community.

For nearly a decade, in response to a financial scandal at the United Way of America and rising donor demand for greater choice in picking causes to support, many local United Ways have tinkered with the way they do business.

A big change was to let donors in annual workplace drives earmark their contributions to agencies outside the United Way.

Many United Ways also identified priority needs in their communities, and created general “community care” funds to which donors can contribute – and from which the United Way itself makes grants to groups addressing those priority needs.

While the changes were rooted in good intentions, their combined effect was to blur the United Way’s focus, diverting funds from United Way agencies.

The changes — an apparent effort to be all things to all people — also helped undermine the initial impulse behind formation of the United Way as a coordinated community effort to support local charities delivering critical health and human services.

Times have changed since 1888, when the first United Way campaign, in Denver, raised $21,700.

For generations, the United Way and its counterparts like the Community Chest raised money through workplace drives at local companies to support groups such as Boys & Girls Clubs, Red Cross, Salvation Army, Scouts and Y.

Today, a growing number of charities address a battery of difficult and complex local needs.

And communities are much more diverse and fluid, with new employers and new residents holding few ties to the region or its charitable organizations, and wanting more say in how their charitable dollars are spent.

Trying to cope with those changes can be tough, and the United Way has worked hard to adjust its strategy to a changing marketplace.

The continuing question for the United Way is what its role should be in a community’s cast of charities.

Other federations, for example, raise funds to meet local needs in education, arts and the environment, while community foundations help donors create endowments to address a broad range of local issues.

By shifting its strategy to raise a pool of money for general use, and then distributing funds to groups addressing critical local needs, the United Way is evolving into a kind of community foundation focused on health and human services.

And as the United Way, like many charities, steps up its efforts to generate endowments and deferred gifts, its role increasingly will resemble that of community foundations in creating and managing perpetual sources of philanthropy, while providing donors with expertise on local needs and charities.

Local United Way boards need to think hard about the role their organizations should play, and how to differentiate the United Way from other charities.

Should the United Way, for example, abandon the idea of supporting member agencies and instead raise money and make grants based on proposals from charities that address priority needs it defines?

And should the United Way join other philanthropic players, such as community foundations and other federations, in creating a new kind of umbrella group dedicated to coordinating the raising and distribution of charitable funds in a community.

In a market economy, employers can be key players in shaping the direction that the United Way and community philanthropy overall will take.

Based on the interests of their employees and customers, employers can decide, for example, whether to open their workplaces to groups other than the United Way, and whether to push for the formation of an umbrella group to better regulate community philanthropy.

The United Way has played an important role in our communities, nimbly shifting gears when it needed to.

Now, with local needs more critical than ever, and with a changing cast of local donors and charities, the United Way needs to work closely with its corporate partners and fellow charities to retool its own role while strengthening community philanthropy overall.

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